Bitcoin is retracing its recent week’s losses, and is poised to regain support lost during the FTX crash. The number one crypto is showing some short-term strength in market capitalization as macroeconomic conditions continue to improve.
Other cryptocurrencies in the crypto top 10 by market value are seeing gains. Dogecoin (DOGE) and Ethereum (ETH) are leading the rally with double-digit gains over the past week. As of this writing, Bitcoin is moving sideways between $16,900 and $17,000 and neighboring levels.
Is Bitcoin Up, Is The Market Over?
Yesterday, US Federal Reserve (Fed) Chairman Jerome Powell hinted at adjusting the monetary policy. The financial institution has been raising interest rates to tackle inflation.
The market is feeling the impact of the Fed’s policies. Unemployment rates are rising, the US economy is slowing, and commodities remain bearish, but above all, the real estate sector has taken a hit.
According to the latest data, US home sales are facing their worst period in decades. This data suggests low inflation but may indicate economic issues for this country. If the Fed does not act, the US could enter recession.
A shock to monthly payments due to interest rate hikes and a new 30-year cost shock that more than doubled from 1 year ago has left buyers scattered. Owners who don’t list or are less likely to. Other owners who settled on higher 2 or 3% mortgages never moved. With supply and demand both decreasing, who will win? https://t.co/pZN96vS27a
— Evan Kirkpatrick (@evankirkpatrick) December 1, 2022
The Fed may be willing to adjust its monetary policy in this context, thus allowing Bitcoin and riskier assets to rally and extend their momentum. However, director of macro investment firm Fidelity Jurrien Timmer He believes. It may be too soon to call victory.
The experts say there are many other factors to consider before calling the bottom part. In fairness, Bitcoin is a closely watched sector, and the next few earnings seasons will be critical.
Companies must show growth at the beginning of next year, otherwise the stock market may take another hit. So far, Timmer believes the chances of significant growth as measured by the Purchasing Managers’ Index (PMI) are “impossible.”
This index measures the condition of the manufacturing and service sectors. The metric provides a view of the current and future health of the business. The chart below shows that the benchmark has room to continue to deteriorate.
Depending on the PMI cycle, the market may see an effective relief in 2024, which interacts with the Bitcoin Halving. This event is a major bullish catalyst for Bitcoin. Timmer said:
(…) It seems premature to expect a lower level of earnings soon. If earnings growth doesn’t slow for another year or so, October’s price lows look very ambitious.
However, Timmer explained that there is a precedent for stocks rallying ahead of a good earnings season. The market experienced these rallies in the 1970s and 1990s, but as mentioned, this possibility is unlikely in the current environment.
Of course, in our current cycle, income growth has been at a high level relative to prices, so the market is looking at that hope in 2018. /END
— Jurien Timmer (@TimmerFidelity) December 1, 2022